TPG - TPG Telecom

[Trembling Hand]

Why do you need to know? Isn't my word enough? If you did know, would it change your mind about buying or selling the stock?

Btw Pixel have you thought of putting a chart up that is more "Professional" so other readers can see what you are talking about!! You have more lines on your charts than there are at Flinders Railway Station

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LOL funny......... in a trolly bollie kind of way

 

[peaceofmind]

one of the most expensive stocks on the ASX

a p/e of 25+ for a junior telco in australia is totally well beyond value.

$5bn+ market cap touched today. Add in $400m in debt, and it has a $5.4bn Enterprise value(EV). its EV/Profit ratio is an extraordinary 27x.

EV to sales ratio is also huge, trading at over 7x sales of $800m!


Only $190-200m net profit, and very low dividends due to capital expenditure and paying for acquisitions like the underperforming AAPT.

sure some growth, but all from a low base and as per usual extrapolated for future years as is the norm in todays bubbly market. its EPS annual growth is in the 10-15% mark just this year, but its share price is up 60% since october! Its up over 6x since GFC prices. Its debt load has increased more % than the earnings.

The size of the australian market for telecom services is limited population wise.
There will surely be increased competitive activity and the profit margins will decline.

 

[piggybank]

There will surely be increased competitive activity and the profit margins will decline.

Maybe but the market doesn't seem to be in agreeance with you presently peaceofmind.

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More can be seen of their 1H14 results reported on the ASX today:- http://stocknessmonster.com/news-item?S=TPM&E=ASX&N=789791

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[piggybank]

Surprised no one else has added to the thread given it's continuing success.

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[rcm617]

Surprised no one else has added to the thread given it's continuing success.

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Just keeps going up and up, ever since Teoh took this over. Only wish I hadn't sold half my holdings several years ago at $1.50. Keep thinking I should sell half again but might regret that in the future again. Should be a bit of growth coming from integrating the AAPT acquisition.

 

[peaceofmind]

Just keeps going up and up, ever since Teoh took this over. Only wish I hadn't sold half my holdings several years ago at $1.50. Keep thinking I should sell half again but might regret that in the future again. Should be a bit of growth coming from integrating the AAPT acquisition.

what company can grow their earnings 5-10% a week? This company is averaging 5% up per week since late last year. thats unbelievable.

last i checked, its selling at a 7-8x revenue multiple. its growing earnings from a low base in a mature telco market(australia with 22mil population only). how many customers are really possible without international expansion. at some point growth will stop, and i'd say a valuation of $2-3bn EV is the maximum for this coy(not 6 billion currently).

 

[rcm617]

what company can grow their earnings 5-10% a week? This company is averaging 5% up per week since late last year. thats unbelievable.

last i checked, its selling at a 7-8x revenue multiple. its growing earnings from a low base in a mature telco market(australia with 22mil population only). how many customers are really possible without international expansion. at some point growth will stop, and i'd say a valuation of $2-3bn EV is the maximum for this coy(not 6 billion currently).

Yes, agree it isn't cheap, PE of about 30 for FY 14, so it is priced for perfection. Can't agree that we are in a mature Telco market, I would think the market is still growing.
The biggest company in the Telco space has a market cap of $57 billion, so plenty of room to expand in this market.
The other thing I like about TPM is that Theo has a big stake in this company, about 30% from memory. He takes all his dividends in shares, so plenty of confidence from him that this company will continue growing.
Despite all this I would think it is due for a bit of a pullback soon, however I have faith in this company in the long run.

 

[peaceofmind]

Yes, agree it isn't cheap, PE of about 30 for FY 14, so it is priced for perfection. Can't agree that we are in a mature Telco market, I would think the market is still growing.
The biggest company in the Telco space has a market cap of $57 billion, so plenty of room to expand in this market.
The other thing I like about TPM is that Theo has a big stake in this company, about 30% from memory. He takes all his dividends in shares, so plenty of confidence from him that this company will continue growing.
Despite all this I would think it is due for a bit of a pullback soon, however I have faith in this company in the long run.

its in a bubble. not saying its a bad company. but its valuation is a reflection of the QE growth stock bubble.

I took one look at the chart. its gone 90 degrees perfectly. No company is perfect. It has about $400m in debt.

you can't compare it with Telstra which is a former public utility and owns all the infrastructure including for NBN. Most of TPG's services are retail level only. It just resells it from Telstra and Optus - its just a middleman.

Market maybe growing, but its all from a low base, and the limited population means natural barriers are there.

Re growth some of its growth is one-off. Like the AAPT acquisition using debt. That might increase earnings from 1 year to next, but it has also increased its debt on the balance sheet and capex liabilities. AAPT is a maintenance capex hungry business.

 

[rcm617]

its in a bubble. not saying its a bad company. but its valuation is a reflection of the QE growth stock bubble.

I took one look at the chart. its gone 90 degrees perfectly. No company is perfect. It has about $400m in debt.

you can't compare it with Telstra which is a former public utility and owns all the infrastructure including for NBN. Most of TPG's services are retail level only. It just resells it from Telstra and Optus - its just a middleman.

Market maybe growing, but its all from a low base, and the limited population means natural barriers are there.

Re growth some of its growth is one-off. Like the AAPT acquisition using debt. That might increase earnings from 1 year to next, but it has also increased its debt on the balance sheet and capex liabilities. AAPT is a maintenance capex hungry business.

The only reason TPM has this debt is because it has just paid $385 million for AAPT, which will increase its revenue by 50%. In the past it has always paid this debt down very quickly from its abundant free cash flow.
I'm not comparing it to TLS, just pointing out there is plenty of room left for expansion. It has infrastructure, including overseas submarine cables and 4000 km of cable in Australia. Add to that 11,000 km of cable from the AAPT acquisition. I believe they will be far more efficient at extracting profit from the business than AAPT was.
Like I said it may have risen a bit fast in the last little while, which is why I have been contemplating selling some, however in the long run they have plenty of growth left in them.

 

[VSntchr]

Some good news for TPG holders this morning, uncertainty lifted -

"TPG Telecom will be allowed by the competition regulator to keep connecting urban apartments to its high speed broadband network despite NBN Co's claim it could lead to its business case collapsing and the potential it could add billions of dollars in expenses to the Budget." - SMH

 

[piggybank]

Yesterdays price action (Up 6% at the close) suggested the market liked the full year results which can be seen here:-

http://www.stocknessmonster.com/news-item?S=TPM&E=ASX&N=819132

Analyst consensus forecasts are for a possible 19% average annual increase in earnings for the next two years. The PE is 29, so you are paying a premium for this growth. Its yield is 1.3% fully franked.

 

[FAT ALBERT]

Can someone tell me where TPG is heading.

 

[Boggo]

Can someone tell me where TPG is heading.

I currently hold and was hoping for around $8.80 based on the assumption that this run up would be a repeat of the previous run.
It has gone up through that level now obviously, there may be a few sellers appearing but I suspect the interest in their market position will attract some attention that will take care of those.

My new target is around $9.50 based on it having broken through the $8.80 area and assuming this holds then the next area is around 1.272 times the previous run up.
(don't ask me to explain, it has resulted in arguments in the past )

(click to expand)

 

[rcm617]

Half year results should be out late next week or early the week after, which will give us a good idea how well the aapt integration is going and how far down they have got the debt from that acquisition. Looks like another $1.5 billion of debt to acquire IIN as well as $200m of IIN own debt. Fortunate cash is cheap at the moment.
Still holding mine, so hopefully Teoh can keep weaving his magic with acquisitions.

 

[j2k]

What do people here think will happen to the share price with the takeover of iiNet?

Although there news that some shareholders aren't happy about the acquisition with the vote to occur this Monday.

Usually acquisition are good for a company if they fit well enough but do people here believe it's already over-valued?

Thanks
James

 

[So_Cynical]

What do people here think will happen to the share price with the takeover of iiNet?

Although there news that some shareholders aren't happy about the acquisition with the vote to occur this Monday.

Usually acquisition are good for a company if they fit well enough but do people here believe it's already over-valued?

Thanks
James

I hold IIN and will vote yes, not that my 1200 shares will make a difference i can't see TPM going higher in the short term with all that new debt however becoming the clear #2 provider will have a positive impact down the road.

I'm inclined to sell out after the merger has gone thru and i get my big fat dividend.

 

[FAT ALBERT]

I hold IIN and will vote yes, not that my 1200 shares will make a difference i can't see TPM going higher in the short term with all that new debt however becoming the clear #2 provider will have a positive impact down the road.

I'm inclined to sell out after the merger has gone thru and i get my big fat dividend.

I,ve just got my Share Purchase Plan App form, but I'm not sure if TPG will be heading anywhere in the near future. Is any body jumping into these.

 

[rcm617]

I,ve just got my Share Purchase Plan App form, but I'm not sure if TPG will be heading anywhere in the near future. Is any body jumping into these.

Probably worth waiting till after the AGM on the 2nd of December to see if we get any feedback.
Noticed Teoh is still taking his dividend in shares so he is still optimistic.

 

[JTLP]

Thoughts from anybody? Sitting around 8.70 now after getting smashed on an increased capital requirement and less $ from the NBN apparently. Although rumour has it that the costs will come down.

 

[joeno]

Thoughts from anybody? Sitting around 8.70 now after getting smashed on an increased capital requirement and less $ from the NBN apparently. Although rumour has it that the costs will come down.

Yes I have a thought about the company in general. And it's not good. I've thought this for years yet it kept going up. A small cheap company with a cheap(skate) philosophy. "make 'em pay less, give 'em the bare minimum"

There's no innovation in that. No genius. Unlike 5 years ago when the share price actually reflected the quality of the service, it does not now. In the past 12 month i've had to cancel all of my TPG packages because the quality has just become so bad as of late.